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Gowanus Industrial Park, Inc v. Hess Corp.*Fn1

April 8, 2011

GOWANUS INDUSTRIAL PARK, INC., PLAINTIFF,
v.
HESS CORP.*FN1 , DEFENDANT.



The opinion of the court was delivered by: John Gleeson, United States District Judge:

MEMORANDUM INVITING AMICUS CURIAE BRIEF FROM THE ATTORNEY GENERAL OF NEW YORK STATE

In a trespass action against Hess Corporation ("Hess"), Gowanus Industrial Park ("GIP") claims title to certain parcels of land (the "parcels"), including the land under water at the Henry Street Basin. The parcels were formerly part of the New York barge canal system, but in 1944 were deeded to the Port Authority of New York by an act of the New York legislature. 44 N.Y. Laws Ch. 410 ("1944 Act"). In 1997, the Port Authority purported to transfer title to the parcels to GIP by quitclaim deed. However, in 2003, Judge I. Leo Glasser found the quitclaim deed void, as the 1944 Act permitted the Port Authority to convey the parcels only to the State. Gowanus Industrial Park v. Amerada Hess Corp., No. 01-CV-0902 (ILG), 2003 WL 22076651 (E.D.N.Y. Sept. 5, 2003) ("GIP I"). In an effort to cure the defect in the 1997 title transfer, the Port Authority conveyed the parcels to the State by quitclaim deed recorded on April 1, 2005. The State then conveyed the Parcels to GIP by letters patent, which were executed by the First Deputy Commissioner of General Services. See City of New York v. Gowanus Indus. Park, Inc., 2008 WL 2572853, at *1 n.3 (N.Y. Sup. Ct. Kings Cnty June 27, 2008), aff'd, 886 N.Y.S.2d 427 (2d Dep't 2009). The Court is now asked to determine, inter alia, whether these transactions successfully transferred title to the parcels to GIP. The Court hereby invites the Attorney General of New York State to file an amicus curiae brief on behalf of the State of New York, addressing the question of whether the transactions successfully vested title to the parcels in GIP.

BACKGROUND

A thorough history of the title to the land under water at the Henry Street Basin can be found in Judge Glasser's 2003 opinion. A brief summary is included here. Pursuant to a 1911 statute authorizing state appropriation of certain lands for the construction of canal terminals, 1911 N.Y. Laws Ch. 746 ("1911 Act"), New York appropriated lands in the Gowanus Bay area including the parcels, which became part of the New York Barge Canal System. GIP I, 2003 WL 22076651, at *3. Section 14 of the 1911 Act prohibited alienation of these lands by the State. 1911 N.Y. Laws Ch. 746, § 14. However, in 1944, the state legislature deemed the Gowanus Bay Terminal "no longer necessary or useful as a part of the barge canal system, or as an aid to navigation thereon or for barge canal terminal purposes," 1944 N.Y. Laws Ch. 410, § 2, and it transferred to the Port Authority "all the right, title and interest of the State" in certain lands that had been appropriated for the Gowanus Bay Terminal, id. § 3.*fn2 Under the 1944 Act, the Port Authority held title to these lands subject to certain conditions. Among them was a prohibition against granting or conveying title to the lands "to any person or legal entity other than the state." Id. § 2(c). The Port Authority was also required to "rehabilitate" the pier properties, and it could not use the lands "for any purpose which will materially and substantially interfere with their use for pier and terminal purposes." Id. § 2(a), (b). If any of these conditions was violated, the properties would revert to the State at the State's option after written notice and an opportunity to remedy. Id. § 5. Any lands so reverting to the State would become "unappropriated state lands." Id. § 8. Although the act was entitled (in part) "An Act providing for the abandonment of a barge canal terminal and barge canal terminal lands," the legislature specified that the Port Authority, in maintaining the pier properties, would be "performing an essential governmental function" by providing "needed transportation and terminal facilities" to the people of New York and New Jersey. Id. at § 12. Accordingly, the land was to remain non-taxable. Id. at § 13.

Despite the restrictions on alienation contained in the 1944 Act, the Port Authority attempted to sell the parcels to GIP in 1997. Prior to the sale, the Port Authority obtained a letter from the Department of Transportation ("DOT") waiving the State's "reversionary interest in the Property[.]" See GIP I, 2003 WL 22076651, at *4 (quoting the DOT waiver). It then executed a quitclaim deed transferring title to GIP. Id. On the basis of this transaction, GIP brought an action against Hess in 2001 (GIP I), alleging that GIP held title to the parcels, which included the lands under water at the Henry Street Basin. GIP further alleged that a bulkhead constructed by Hess in the Henry Street Basin encroached on the parcels and constituted a trespass. On cross-motions for summary judgment, Judge Glasser determined that the bulkhead was partially located within the boundaries of the parcels, id. at *7-*9, but that GIP neither owned nor possessed the parcels. With respect to GIP's claim of ownership, Judge Glasser held that the attempted 1997 transfer was void because, absent a supervening act of the legislature, the 1944 Act prohibited GIP from transferring the parcels to an entity other than the State. Id. at *9.

In late 2004, GIP and the Port Authority attempted to cure the defect in GIP's title. On November 29, 2004, the Port Authority assigned its interest in the parcels to the State by quitclaim deed, Def.'s Mem. Support Mot. Dismiss Ex. 2, Feb. 18, 2011, ECF. No. 6 ("Nov. 2004 Deed"), and on December 21, 2004, the State deeded the property to GIP by letters patent, executed by Robert J. Fleury, First Deputy Commissioner of General Services, id. Ex. 1 ("Letters Patent"). The letters patent indicate that the transfer from the State to GIP was made pursuant to § 50 of the Public Lands Law, which governs the sale of abandoned canal lands, and "Findings of the First Deputy Commissioner of General Services dated December 15, 2004." Letters Patent at A-91; see also Charles S. Sims Letter Ex. A, March 30, 2011, ECF No. 12 ("December 15 Findings"). They further indicate that the transfer was made in consideration for one dollar "and other good and valuable consideration paid by Gowanus Industrial Park, Inc." Letters Patent at A-91. Both the November 2004 quitclaim deed and the December 2004 letters patent reference Judge Glasser's 2003 opinion and state an intent to cure the defect described in that opinion. Nov. 2004 Deed at 1-2; Letters Patent at A-95. The December 15 findings also reference the 2003 opinion and state that GIP applied to the State Office of General Services "requesting that the State of New York ratify or confirm title in GIP." December 15 Findings at 1.

In 2010, GIP brought this action against Hess, again objecting to the location of the bulkhead that had featured in the action before Judge Glasser. Among other relief, GIP seeks damages for Hess's alleged continuing trespass and a declaration that it is "the sole and exclusive legal and equitable owner of the Parcels[.]" Compl. ¶ 42, Nov. 30, 2010, ECF No. 1. Currently before the Court is Hess's motion to dismiss the action which argues, in part, that GIP does not have title to the lands under water at the Henry Street Basin because the 2004 transactions are a nullity.

The Court is therefore asked to determine whether the 2004 transactions successfully transferred title from the Port Authority to GIP via the State of New York. The State, acting through its First Deputy Commissioner of General Services, expressed a clear intent to help the Port Authority cure the defect identified by Judge Glasser and to vest title to the parcels in GIP. However, it appears that there is a genuine issue as to whether the letters patent issued by the State were insufficient to achieve the State's purpose.

DISCUSSION

The parties have presented the Court with no reason to question the validity of the transfer from the Port Authority to the State. However, Hess has suggested several potential weaknesses in the subsequent transfer from the State to GIP. The Court would greatly benefit from a submission by the Attorney General of New York State addressing the questions presented below, together with any other issues the Attorney General deems relevant to the ownership status of the parcels.

A. Were the Parcels Properly Conveyed as Abandoned Canal Lands?

The letters patent transferring title from the State to GIP indicate that the transfer was made pursuant to § 50 of the Public Lands Law, which governs the sale of abandoned canal lands. Letters Patent at A-91. This transfer raises at least two issues: (1) whether the parcels at issue qualify as "abandoned canal lands" at all; and (2) even if they do, and Public Lands Law § 50 applies, whether its requirements for the sale of abandoned canal lands were met.

1. Are the Parcels Abandoned Canal Land Within the Meaning of § 50 of the Public Lands Law?

The Office of General Services found on December 15, 2004 that the parcels had been abandoned as canal lands by the 1944 Act and that their transfer was governed by Public Lands Law § 50. December 15 Findings at 1. Public Lands Law § 50 applies to any lands "acquired for canal purposes, which the commissioner of transportation may determine to have been abandoned for such purposes, or as to which a determination of abandonment shall have been heretofore made pursuant to law." N.Y. Pub. Lands Law § 50. Section 50 of the New York Canal Law governs the abandonment of canal lands. In 1944, Canal Law § 50 conferred authority upon the superintendent of public works to abandon any portion of barge canal lands, barge canal terminal lands, or old canal lands . . . which have or may become no longer necessary or useful as a part of the barge canal system, as an aid to navigation thereon, or for barge canal terminal purposes. This authority, however, shall not include the abandonment of a barge canal terminal unless such terminal has been by a special act of the legislature previously determined to have become no longer necessary or useful as a part of the barge canal system, as an aid to navigation thereon, or for ...


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